ATA Inc. (ATAI) Stock Runs Up On Acquisition News

ATA Inc. ATAI Stock News

ATA Inc. (NASDAQ: ATAI) is running for the top in the market this morning, trading on gains of more than 14% early on. The gains come after the company announed that it will acquire ACG. Here’s the scoop:

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ATAI Stock Climbs On ACG Acquisition News

In a press release issued early this morning, ATA Inc. announced that it entered into a definitive agreement with Beijing Huanqiuyimeng Education Consultation Corp., also known as ACG. Under the terms of the agreement, the company will acquire ACG.

In the release, ATAI said that ACG is a leading provider of educational services for studients in China that are interested in studying abroad. The agreement follows an announcement made on April 9, 2019.

In the April 9th announcement, the company said that it entered into framework agreements and certain conditional share purchase agreements in connection to the acquisition.

Acquisition Funding

As part of the agreement, ATAI said that it will issue 9,360,000 ordinary shares to Arts Consulting Limited, the sole shareholder of ACG International Group, a group that owns a 69.04% equity interest in ACG. As such, ATA Inc. will become sole shareholder of ACGIGL and will hold the 69.04% interest in ACG.

As a result of the newly issued shares, ArtsCL will become a 16.5% owner of ATAI on a fully diluted basis.

The company also announced that it entered into separate conditional share purchase agreements with minority shareholders of ACG. Under these agreements, the company intends on acquiring the remaining 30.96% equity interest in ACG.

Why This Is So Exciting For Investors

At the end of the day, the acquisition of ACG is expected to be a highly accretive one. In fact, upon completion of the acquisition, the company will benefit from a nearly immediate rise in revenue.

While the issuance of new shares dilutes the holders of shares in the company, this dilution is forgiven due to the high potential value that the new asset brings to the table. All in all, the transaction proved to be a positive move for ATAI, its investors, and all involved.

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